Articles Posted in Investment Terms and Concepts

How Are Microcap Stocks Different From Other Stocks?

Lack of public information.  Often, the biggest difference between a microcap stock and other stocks is the amount of reliable publicly-available information about the company. Most large public companies file reports with the SEC that any investor can get for free from the SEC’s website. Professional stock analysts regularly research and write about larger public companies, and it is easy to find their stock prices on the Internet or in newspapers and other publications.  In contrast, the same information about microcap companies can be extremely difficult to find, making them more vulnerable to investment fraud schemes and making it less likely that quoted prices will be based on full and accurate information about the company.

No minimum listing standards.  Companies that list their stocks on exchanges must meet minimum listing standards. For example, they must have minimum amounts of net assets and minimum numbers of shareholders. In contrast, companies quoted on the OTC Bulletin Board (OTCBB), OTC Link LLC (OTC Link) or Global OTC generally do not have to meet any minimum listing standards, but are typically subject to some initial and ongoing requirements. You can find the OTCBB’s eligibility requirements for stocks at  and you can find additional information about OTC Link and Global OTC at  and , respectively.

FAQ – Where Do Microcap Stocks Trade?

Many microcap stocks trade in the “over-the-counter” (OTC) market. Quotes for microcap stocks may be available directly from a broker-dealer or on OTC systems such as the OTC Bulletin Board (OTCBB), OTC Link LLC (OTC Link), or Global OTC.

OTC Bulletin Board is an electronic inter-dealer quotation system that displays quotes, last-sale prices, and volume information for many OTC equity securities that are not listed on a national securities exchange. The OTCBB is operated by the Financial Industry Regulatory Authority, Inc. (FINRA). You can read more about the OTCBB marketplace at .

What Is a Microcap Stock?

The term “microcap stock” (sometimes referred to as “penny stock”) applies to companies with low or micro market capitalizations. Companies with a market capitalization of less than $250 or $300 million are often called “microcap stocks” – although many have market capitalizations of far less than those amounts. The smallest public companies, with market capitalizations of less than $50 million, are sometimes referred to as “nanocap stocks.”

Please be advised that this information is being provided for educational purposes only.  It is not designed to be complete in all material respects.  If you have any questions about this post or have been adversely affected by investing in a microcap or nanocap stock, you should contact a qualified professional.

What is a Boiler Room Scheme?

Boiler room schemes are large-scale operations designed to lure in as many investors to an investment scam as possible, often using high-pressure sales tactics.  Boiler room scheme operators may cold call investors or solicit investors through emails, text messages, social media, and other means. Beware of boiler room scheme tactics, including:

Aggressive Sales Tactics or Threats. Fraudsters may use aggressive sales tactics or even threats (for example, threatening to file a lien against your property) to swindle you.

Do anti-fraud provisions apply?

All securities transactions, even exempt transactions, are subject to the antifraud provisions of the federal securities laws. This means that you and your company will be responsible for false or misleading statements that you or others on your behalf make regarding your company, the securities offered, or the offering. You and your company are responsible for any such statements, whether made by your company or on behalf of the company, and regardless of whether they are made orally or in writing.

The government enforces the federal securities laws through criminal, civil and administrative proceedings. Private parties also can bring actions under certain securities laws. Also, if all conditions of the exemptions are not met, purchasers may be able to return their securities and obtain a refund of their purchase price.

Exchange Traded Notes (ETNs) Frequent Asked Questions – Boca Raton, Florida FINRA Arbitration and State and Federal Court Litigation Attorney:

Frequently asked questions about Exchange Traded Notes (ETNs).  ETNs are unsecured debt obligations of financial institutions that trade on a securities exchange. ETN payment terms are linked to the performance of a reference index or benchmark, representing the ETN’s investment objective.  You should understand that ETNs are complex and involve many risks for interested investors, and can result in the loss of your entire investment.

What is an ETN?

Bank Claims – Breach of Fiduciary Duty and Breach of Contract Federal and State South Florida Commercial Litigation Attorney

Bank Claims – Breach of Fiduciary Duty:

Does a bank owe you a duty of care, which would support a claim for negligence?

FAQs Margin – Boca Raton, Florida Margin Abuse and Breach of Fiduciary Duty FINRA Arbitration and Litigation Attorney


Borrowing Money To Pay for Stocks:

T + 3 – Settlement of Security Transactions – Boca Raton, Lake Worth and North Palm Beach, Florida Securities Litigation and Arbitration Attorney

What is meant by T+3?

Generally, investors must complete or settle their security transactions within three business days. This settlement cycle is known as “T+3,” shorthand for “trade date plus three days.”

FAQs Regulation SHO – Boca Raton and Delray Beach, Florida Securities Litigation and Arbitration Attorney

Regulation SHO

Compliance with Regulation SHO began on January 3, 2005. Regulation SHO was adopted to update short sale regulation in light of numerous market developments since short sale regulation was first adopted in 1938 and to address concerns regarding persistent failures to deliver and potentially abusive “naked” short selling.

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